Did your child just graduate from college or high school? This may be your last chance to grab a dependency exemption.
Strategy: Make sure you provide more than half of the child’s annual support. It doesn’t matter how much the child earns from a new job.
Generally, you can’t claim a dependency exemption if the person’s taxable income exceeds the annual personal exemption amount ($3,400 for 2007). But this test doesn’t apply to children under age 19 or full-time students under age 24.
Tip: A child is considered a full-time student if he or she attended school five months in the year, even if the months aren’t consecutive.